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Keurig Green Mountain Caters to Organic Coffee Demand

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Keurig Green Mountain’s organic coffees

In the previous part of this series, we discussed Keurig Green Mountain’s (GMCR) new line of organic coffees. The new line caters to the growing demand for organic coffee.

A shift in consumer preference toward healthier products and increased awareness has resulted in a surge in the demand for organic food and beverage products. Organic products use ingredients that are grown using methods that are said to preserve the environment and that avoid the use of pesticides.

According to the Organic Trade Association, US organic product imports exceeded organic product exports in 2014. US imported organic products were worth ~$1.3 billion in 2014.

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Organic coffee imports

Organic coffee is the largest category of US organic imports in terms of dollar value. After declining for many years, organic coffee imports increased by 31.3% to $332.5 billion in 2014. Based on data provided by the Organic Trade Association, organic coffee accounted for 5.7% of total coffee imports in 2014.

Peru, Indonesia, Mexico, Brazil, and Colombia are the top five countries from which organic coffee is imported. Organic coffee imported from Peru accounted for 19% of the total US organic coffee imports in 2014. The new organic coffee line from Keurig Green Mountain includes a variety that uses organic coffee sourced from the Cajamarca region of Peru.

Beverages with natural and organic ingredients

There’s an increasing demand for beverages with organic ingredients. For example, Coca-Cola’s (KO) Honest Tea is brewed using organic tea leaves and contains organic cane sugar. Soda drink makers are also focusing on using natural sweeteners due to the perceived ill effects associated with artificial sweeteners. Coca-Cola’s Coca-Cola Life and PepsiCo’s (PEP) Pepsi True contain a natural sweetener called stevia.

Coca-Cola, PepsiCo, and Keurig Green Mountain together make up ~14.5% of the Consumer Staples Select Sector SPDR Fund (XLP) and 1.7% of the iShares Core S&P 500 ETF (IVV).

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